Sunday, Jul 6, 2008
Why didn't the media question Bush's shady stock dealings before he became president?
Jul 16, 2002 | Why the activities of oilman George W. Bush in the 1980s and 1990s should be a matter of headlines now is something of a mystery. The mystery isn't what actually happened. It is clear that in the course of making roughly $16 million, Bush flouted securities laws, rode roughshod over the rights of others and found protection among his father's friends. (Bush's memory is fuzzy on some of the details.)
But the real mystery -- and it is every bit as important in a democracy as what Bush knew and when he knew it -- is the one memorialized by the "curious incident" of the dog that roused Sherlock Holmes' interest in "Silver Blaze." The dog did nothing, Watson protested. But that was the point, said Holmes: Why didn't the dog bark on the night of the murder?
The "curious incident" regarding the president's shady stock dealings is why the watchdog media didn't bark during the 2000 presidential election, when new unflattering evidence emerged in the month before the vote. This is not a question that even now the media is bothering to probe, which at least demonstrates a consistent talent for inertia. Indeed, if there is any effort now among the most delinquent, it is to cover up their inadequacies by misrepresenting what they did, or by suggesting the story is no big deal anyway, and never was.
Back in 1991 it became known that when Bush, a director and consultant to Harken Energy, made a June 1990 insider sale of Harken stock, he failed to complete the requisite SEC Form 4. The deadline for reporting insider trades is the 10th day of the following month; Bush was eight months late. He unloaded more than 200,000 Harken shares for $848,560, just before the company revealed a quarterly loss of $23 million and its stock cratered. The story is that an institutional investor -- an unnamed good fairy with a gift for timing -- called Bush's stockbroker just at the moment Bush needed $600,000 for a minority stake in the Texas Rangers. This was the stake he sold in 1998 for $16 million. The SEC, having looked into the affair, did not press any charges.
But that was then. During the presidential election, a more thorough investigation was carried out by a group of journalists at a time when Bush was saying he would run the White House like a business corporation. The reporters' conclusion was that candidate Bush's own business model was uncomfortably close to today's increasingly scandalous business practices. The general public, however, was not enabled to weigh this conclusion before it went to vote for president, because the press, print and electronic, signally failed to publicize the facts.
The revelations, based in part on documents secured under the Freedom of Information Act, were published in Talk magazine a month before the election. (I declare something of an interest here, in that the magazine was edited by my wife, Tina Brown.) The long report was the work of two Talk writers, Bill Minutaglio, a Bush biographer, and Nancy Beiles, who worked with Peter Eisner and Knut Royce at the Center for Public Integrity. This is what they reported:
First, Bush had made not just one but four Harken stock transactions worth more than $1 million between the time he joined the board of Harken and the beginning of the SEC probe. And each time he was at least three and a half months late filing the legal required report to the SEC. The writers quoted Alan Dye, who worked at the SEC during the Reagan administration, that this was getting into "dangerous territory."
Two, Bush had access to more knowledge than had previously been reported that Harken was failing financially at the time he dumped most of his stock, on June 22, 1990. The SEC never challenged Bush's claim that he had no idea Harken was in trouble -- and that if he had he would never have sold. But the magazine quoted documents showing Bush had been warned that the company was in bad financial trouble at least twice during the month he cashed out. On June 7, 1990, for instance, he received a memo from Harken CEO Mikel Faulkner, in which Faulkner predicted that sometime before the end of the month the company would run out of cash. He also noted that by August Harken would be in violation of "numerous" debt agreements. The magazine commented: "Of course it is possible he never read the materials, his colleagues told the SEC they provided. After all, Bush is famous for his aversion to long and complicated reports. But if he did in fact skip meetings and blow off memos, he would have left himself open to an equally damaging charge: dereliction of his fiduciary duties as a Harken director."
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